Indian stock markets extend recovery this week amid geopolitical tensions

• NEW DELHI — The Indian stock markets extended their recovery for yet another week, registering nearly a one per cent gain amid a phase of consolidation.
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• After an initial surge, the benchmarks traded in a narrow range through the middle of the week, before witnessing profit-taking in the final session. Ultimately, the Nifty and Sensex ended at 24,039.35 and 79,212.53 respectively.
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• According to analysts, global market stability, driven by ongoing discussions between the United States and its trade partners on new trade agreements, helped ease concerns about the impact of tariffs on global commerce.
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• “This, coupled with renewed foreign institutional investor (FII) inflows, bolstered market sentiment. However, rising geopolitical tensions between India and Pakistan — following a terrorist attack in Jammu and Kashmir — sparked investor caution and led to some profit-booking,” said Ajit Mishra–SVP, Research, Religare Broking Ltd.

Also read: Foreign investors make notable return to Indian equity markets in April

• Sector-wise, the sharp rebound in the IT sector stood out as a key driver.
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• Additionally, the auto, pharma, and real estate sectors also posted gains. Conversely, financials and fast-moving consumer goods (FMCG) sectors ended the week in the red. Broader market indices managed to close in the green, delivering gains in the range of 0.83 per cent to 1.73 per cent.
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• According to a note by Bajaj Broking Research, index on weekly chart has formed a bull candle with a long upper shadow which maintained a higher high and higher low, signalling positive bias with profit booking at higher levels after recent strong up move.
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• “Going ahead in the coming truncated week, a move above last 3 sessions almost identical high (24,365) will open further upside towards 24,550 being the 61.8 per cent retracement of the entire decline (26277-21743). Failure to move above last week high (24365) will signal consolidation in the range 23,500-24,350,” the note said.
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• Bank Nifty formed a bear candle with a lower high and lower low signalling consolidation with corrective bias for the third session in a row amid profit booking after recent strong rally of 11 per cent in the preceding 7 sessions.
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• “We expect index to consolidate in the range of 53,500-55,500 in the coming sessions thus working off the overbought condition developed after the recent strong rally,” said Bajaj Broking Research.
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• In the current scenario, it is advisable to maintain a positive yet cautious approach, with a preference for hedged positions in the index.
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• Stock-specific opportunities are likely to remain abundant on both the long and short sides. Hence, the focus should be on identifying stocks with favourable risk-reward setups, said market watchers.
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• On the macroeconomic front, investors will closely track the Index of Industrial Production (IIP) data and the HSBC Manufacturing PMI Final data. Meanwhile, geopolitical developments between India and Pakistan will remain on the radar.
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